Diversify Resources to Push Bio-ethanol Industry Forward

Ethanol demand in SEA countries is determined by governmental energy policies within the region. As such, the difference in crude oil prices has the least impact on the ethanol demand. Among SEA countries, ethanol demand may vary in accordance to the mandatory policies.

In some SEA countries, ethanol is seen as an additive to fuel, taking 5-10% of gasohol fuel in Indonesia by 2010 and 15% of gasohol fuel in Thailand by 2010. Philippines hope to achieve 5% bio-ethanol in gasohol fuel by 2010 while other countries like Malaysia, Cambodia, and Laos are setting up facilities to produce ethanol for fuel consumption and to complement policy for bio-ethanol by 2010.

According to Frost & Sullivan's Asia Pacific Research Analyst of Chemicals, Material & Food Practice, Ratneswary Balasingam, Indonesia and Thailand are leading the way for ethanol development and usage. In 2009, Indonesia announced its plans to invest 200 trillion Rupiah (US$22 billion) over the next five years to promote the use of alternative fuels using crops such as palm oil, cassava, jatropha and sugar cane for the production of bio-diesel and ethanol.

"Village and/or province programs run by the government through the involvement of various agencies aim to educate and develop local production of bio-ethanol. In both Indonesia and Thailand, continuous R&D on potential raw materials, processing technology and increasing the yield of selected raw materials like sugar cane and cassava, are among the strategies practiced," she added.

However, the effects of the Global Economic Slowdown may deter government policies. Local governments may focus more on recovering their economic status and the need to allocate bailout funds or incentives to remain potent.

In terms of industry specifics, Balasingam identified the changing of energy source dependency from crude oil, which is mostly exported, to locally produced bio-fuel as a more manageable cost of energy.

"Also, as demand increases, getting a proper supply of raw materials may lead to the conversion of forest areas to plantation lands. To protect SEA's heritage of fauna and flora, proper management of natural resources is required. It is estimated that a total of 2 million hectare for sugar cane cultivation and 3.3 million hectare for cassava cultivation will be opened by 2010 in Thailand, Indonesia and the Philippines," she added.

Asian countries have strong resources for raw material such as molasses and cassava. Balasingam continues, "Current trends in Thailand and Indonesia see the governments' initiatives to move into bio-mass as the raw material to produce bio-fuel. Diversifying resources and moving into the 2nd Generation of Bio-ethanol production is seen as the way forward."

"There will also be focus on the development of rural society and an emphasis on the Knowledge Economy which includes R&D and Technology for Material and Usage," she said.

source: Frost & Sullivan